High-street retail resists credit crunch

The European high street retail market is showing no signs of being affected by the current credit crunch, Boris van Haare-Heijmeijer, partner retail services at Cushman & Wakefield said at the MIPIM trade fair in Cannes. ‘Top quality high-street locations are still going for top prices. There may be a lot fewer investors lining up to bid, but the competition is still fierce,’ he said. The reason retail spots have not been hit like offices in Europe is simply the scarcity of good quality product. Surprisingly, some of the best prices being paid for high-street stores are still in the mature European markets. ‘

We’re in negotiations on a small portfolio in the Benelux and it will go for an initial yield of 4%. Top quality is still doing well,’ he noted. Central and Eastern Europe have a lot of potential, but there is still quite a bit of uncertainty, certainly in Eastern Europe, Van Haare-Heijmeijer said. At the same time, he noted, ‘exotic’ locations like Kiev will become very popular in the near future as retailers look for new markets. Right now, the high-street retail market is being driven by department store chains looking to grow.

‘If top retailers like H&M and Zara want to maintain 15% annual growth, they have to open 400 to 500 new stores every year. And to do that they will have to move outside the more established markets, both in Europe and beyond. So while the best markets to buy in will be Europe´s top cities, there will be opportunities in both secondary markets and secondary cities. This is particularly true of Germany, Van Haare-Heijmeijer said.

´Germany has been so bad for the past five or six years, it had to get better. Germany has an abundance of good secondary cities and the market is really picking up. However, Germany is quite a difficult market, and not as open to new retailers as some countries, so retailers will have to get it right to make their mark there.´